This recession might be a surprisingly good one for motorbike and motorcycle manufacturers—with the likely exception of Harley-Davidson.
There is early evidence from China and European countries that have brought the pandemic under control that consumers are buying bikes. In May, two-wheeler sales in Germany, Austria and the Netherlands were ahead of the same month’s tally last year, though at the European level, they were still down 10% due to lingering problems in the U.K. and Spain. Market-intelligence provider MotorCycles Data expects the recovery to gather pace in June, with forecast sales in Italy up 20% on the year.
The reason is a shift from public to private transport as people try to avoid the coronavirus.
“It isn’t just motorcycles and scooters but also e-bikes and electric skateboards and bicycles. They’re all great for people trying to avoid each other,” says MotorCycles Data Chief Executive Carlo Simongini.
The preference for private transport is also clear from daily data on routing requests published by Apple. In countries that have emerged from lockdowns, like Germany and France, people are asking Apple Maps for driving options more than they used to.
For some auto makers, too, this social-distancing effect may take the edge off the recession. Some affluent consumers who had deferred car ownership in favor of ride-hailing and public transport may now buy one. In China, sales of premium vehicles such as BMWs and Audis were up 15% in May compared with the same month last year, according to insurance data tracked by Bernstein. The brokerage attributes this in part to wealthy urban dwellers avoiding public transport.
But cars are big-ticket items that less privileged consumers may not spring for in a period of economic uncertainty. Overall, the Chinese market is still shrinking. Likewise, European car sales fell 52% in May—much worse than the market for two-wheelers. In many countries, small motorbikes or scooters may hit a sweet spot between the expense and parking hassle of cars and the health risks of public transport.
The U.S., with its strong culture of car ownership, could be the big exception. Here, the motorcycle market has long been dominated by the kind of big leisure bikes made by Harley-Davidson rather than the smaller, practical motorbikes popular in much of the world. But U.S. sales have been falling in recent years, and Harley’s share price with it, as the Hells Angels generation has aged. There is no reason to think social distancing will turn this trend around.
Investors might be better off with Honda. The Japanese company is better known in the U.S. for cars, but it makes more profit on two-wheelers, selling roughly one in three bikes globally. That is a much more dominant market share than any car maker can boast, points out Ben Preston of London-based fund manager Orbis, which owns the stock.
A potentially more exciting stock is Niu Technologies, a Chinese maker of high-end electric two-wheelers listed on the Nasdaq. The difference is that investors already seem up to speed on Niu’s growth—the stock is up 88% this year, even as Honda’s has fallen 13%.
The unique causes of this economic downturn will make for some unusual pockets of outperformance. The more practical end of the two-wheeler market could be among them.
Harley-Davidson motorcyclists don face masks to ride the streets of Beijing.
Photo: wu hong/EPA/ShutterstockWrite to Stephen Wilmot at stephen.wilmot@wsj.com
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